After years of declining turnover, the outlook for the UK oilfield services sector (OFS) is more positive in 2018, according to a new report from EY published Wednesday.
EY’s Review of the UK Oilfield Services Industry highlighted that the UK OFS sector reported a decline in turnover for the second consecutive year in 2016, from $49.5 billion (GBP 35.7 billion) in 2015 to $41.9 billion (GBP 30.2 billion), with reductions across each of the supply chain categories (facilities, marine and subsea, reservoirs, support and services and wells).
Figures for 2017 are also expected to show a decline but 2018 looks ‘more positive as pressure from external factors ease’, according to the report.
“The industry is entering a more positive environment where oil price is rising and production is increasing as a result of both improved efficiencies and new fields coming on line, but this cannot give license for old habits to creep back in,” Derek Leith, EY partner and head of oil and gas tax, said in a statement sent to Rigzone.
“Long term success for the UK oilfield services sector will rely not only on the continued application of greater efficiencies but an active commitment to a sustainable future for the industry,” he added.
The report also emphasized that the need for UK OFS companies to diversify their operations by sector or geographically through exports will become ‘ever more pressing’.
“UK OFS companies cannot rely on growth in the UK alone to increase revenues and must both internationalize and diversify their operations to ensure long term survival,” Leith stated.
The report showed that exports accounted for 41 percent of turnover from UK OFS companies in 2016, up slightly from 40 percent in 2015 but down considerably from the 48 percent figure seen in 2010.
“While it is encouraging to see a rise in export activity it is concerning that access in overseas markets is still very modest,” Leith said.